Chicago area housing market is 'fragile'

The Chicago area's housing market remains 'fragile,' burdened by long foreclosure processing times, an abundance of vacant homes and many severely underwater mortgages, the Treasury Department said Friday.

Sales of distressed properties -- foreclosed homes and short sales -- account for 35 percent of existing home sales, higher than the national average and those sales continue to exert downward pressure on home prices, the report said.

Local home prices, which grew at a slower rate in the Chicago area than in much of the nation during the market's headier times, have since fallen by a greater percentage than the nation as a whole.

Meanwhile, the average time needed to process a foreclosure action in Illinois' courts is 575 days, compared with 348 days nationally, which means that distressed properties remain in the foreclosure pipeline 50 percent longer, on average, than in other cities.

The widely released report, which includes data from 14 counties in the Chicago area, including Lake County in Indiana and Kenosha County in Wisconsin, shines a national spotlight on Chicago and paints a somber picture of President Barack Obama's hometown.

"The challenges in the diverse Chicago housing market have been more severe than those in most areas of the nation," said the report, which accompanied the Obama administration's March scorecard on its various efforts to aid the housing sector.

The administration is planning a "Help for Homeowners" event April 23 from 1 to 8 p.m. at the Donald E. Stephens Convention Center in Rosemont. More information on the free event is available at makinghomeaffordable.gov.

Data released on the Home Affordable Modification Program showed that through February, of the 1.8 million homeowners that had been offered trial mortgage modifications since the program began in early 2009, 973,582 borrowers, or 54 percent of them, were converted into permanent loan modifications. And of those borrowers who received a permanent modification plan, 782,609, or 80 percent of them, remain in active modifications.